Financial Crime World

Title: Norwegian Court Orders Danske Bank to Pay NOK 39 Million in Compensatory Damages for Edison’s CEO Fraud Case

Background

  • Autumn 2019: Edison’s Norwegian subsidiary becomes victim of CEO fraud
  • Managing director received fake request from scammers posing as Edison’s CEO
  • NOK 130 million in payments made over two weeks to fraudsters’ accounts
  • Danske Bank the intermediary for transfers
  • Edison files lawsuit against Danske Bank for compensatory damages in spring 2020

The Case

April 19, 2023: The Borgarting Court of Appeal rules in favor of Italian energy company Edison, ordering Danske Bank to pay NOK 39 million in compensatory damages and interest on late payments.

  • Hjort law firm represented Edison throughout the trial
    • Nils Christian Langtvedt, partner
    • Ole Iversen, Johnstad Kalvø, and Øivind K. Foss, lawyers

The Fraud

The Scheme

  • Managing director at Edison’s Norwegian subsidiary received seemingly genuine request
  • Scammers posed as Edison’s CEO in Italy
  • Instructed Edison to facilitate acquisition-related transactions

Red Flags Ignored

  • No prior history of payments to Hong Kong
  • Destination of transfers raised suspicion

Court’s Rationale

Obligation to Prevent Fraudulent Transactions

  • Danske Bank failed to establish adequate control measures
  • Edison bypassed from the bank’s automated control system
  • One payment inadvertently stopped was not enough

Breach of Anti-Money Laundering Act

  • Inadequate customer onboarding information
  • Follow-up of transactions inappropriate under the Money Laundering Act

Majority’s Decision

  • Danske Bank’s conduct deviated from robust control regime
  • Failure to meet professional duties led to fraud
  • Edison contributed to the Bank’s liability (NOK 39 million compensation)

Dissent and Appeal

  • 2-1 dissent
  • Decision has been appealed

This article provides an overview of the case. For more detailed understanding, specialist advice is recommended.